Coinbase ends three-quarter losing streak with $719M profit

Coinbase managed to snap its three-quarter losing streak and pull in a profit. The exchange clocked $1.22 billion in Q3 revenue—a 35% drop from the same period last year—but still a massive win, as net income climbed 66% to $719 million.

For the past three quarters, Coinbase has struggled with losses amid continued volatility in crypto markets. Nonetheless, trading activity picked up in September, seeing as crypto prices recovered. Still, analysts remain divided over how much the price rebound actually helped the exchange and whether the momentum will last.

Coinbase’s newer businesses are doing well

Under CEO Brian Armstrong’s direction, Coinbase has been aggressively pushing into alternative financial products to shield itself from sudden token crashes. Some of these products delivered strong results in Q3. For instance, subscriptions and non-trading services brought in 49% of overall net revenue.

The number of paying Coinbase One subscribers particularly climbed 24% year over year to a new record in Q3 2026. The group represents some of the platform’s most valuable customers, with average revenue per user 3.5 times higher, balances 4.2 times larger and long-term trading retention more than 50% higher. 

Furthermore, the firm’s prediction markets platform has scaled remarkably quickly, with an annualised revenue run rate exceeding $200 million. Since its launch, the prediction markets platform has seen 82% quarterly compound growth and a daily trader count growth of 60%+ quarter over quarter. 

USDC revenue provides another boost to Coinbase

Coinbase is also benefiting from the increasing demand for USDC (a dollar-pegged stablecoin issued by Circle). The exchange said average USDC held across products was a record $22 billion in Q3 2026 (+49% YoY).

The growth resulted in $307 million in stablecoin revenue during the quarter (up from $292M Q2). The exchange said it was driven by higher average USDC balances and interest rates, but some of the growth was offset by balances held outside its platform.

The stablecoin business is particularly important to Coinbase’s diversification strategy because it provides revenue beyond traditional cryptocurrency trading. But it still has some sensitivity to interest rates and to the amount of USDC customers hold on Coinbase products.

Cumulatively, in Q3, Coinbase’s share of global trading volume reached 10.7%. The exchange also strengthened its position in spot and derivatives trading, with crypto derivatives trading volume increasing at a compound annual growth rate (CAGR) of 179% over the past two years.

Coinbase lowered trading fees in September, raising concerns

Coinbase has been facing growing pressure from cheaper rivals, including Robinhood Markets Inc. More recently, the exchange responded with reduced fees for many active traders. However, some experts worry that, given current market dynamics, trading fees across the crypto exchange industry could eventually fall to zero. 

“Everyone wants to know if it’s going to be the beginning of a take-rate decline,” said Dan Dolev, an analyst at Mizuho Securities USA. 

Up until September, Coinbase had enough pricing power to protect itself against any market downturn by adjusting fees. The company managed to protect its revenue from transaction fees by raising fees for casual buyers and offering discounts to high-frequency trading users.

Matthew Sigel, the head of digital assets at VanEck, like many analysts, agrees that the weak link for exchanges is pricing. He said that if platforms are unable to convert active trading into revenue due to fee reductions, the entire ecosystem suffers.

In addition, he stated that Coinbase is particularly vulnerable to this pricing problem because of its track record of generating revenue through high fees charged to retail clients, which breaks down once fee compression becomes the norm.

Looking ahead, analysts remain divided over Coinbase’s diversification strategy. JPMorgan sees significant upside potential in tokenization, payments and Base, while Barclays is more sceptical that these businesses will sufficiently offset the exchange’s dependence on retail trading revenue and USDC.

All told, Coinbase’s latest results suggest that its diversification strategy is gaining traction. However, the exchange has yet to prove that its newer businesses can generate enough revenue to offset weaker retail trading activity. Its ability to expand stablecoin adoption, prediction markets, and blockchain infrastructure could determine whether it can sustain profitability through another prolonged crypto market downturn.